Lancaster can't afford House Bill 5

Yet that's exactly what city officials expect to happen if House Bill 5, which is under consideration in the Ohio Senate, is passed as it is written today.

The bill, designed to make life easier for businesses by setting all cities' income tax codes the same way, already passed the Ohio House.

The city would lose $340,000 per year alone, which would be caused by elimination of a net-operating loss carry-forward policy. That would require cities to allow businesses to apply present-day losses toward reducing their tax burdens up to five years in the future. Lancaster doesn't allow that today.

Another $250,000 would be lost if the state moves ahead with a plan to require only out-of-town workers who are in town to pay income tax after they've worked 20 days in the city. Today, that number is 12, and they then pay retroactively for all 12 days. The current proposal is for 20 days and isn't retroactive.

That latter is particularly worrisome when we consider all the construction projects coming to town, for Lancaster school buildings, ongoing highway projects and the hospital expansion already underway. A significant number of those contractors will likely come from out of town.

We do support the notion that every city's tax structure should work the same; that makes sense for not only businesses but also individuals who work in multiple locations. However, we don't think this is the way to do it.

Local governments have already taken a hit from reductions in other areas, such as local government funding and the elimination of the estate tax, but they have largely weathered the blow. It doesn't make sense, therefore, to throw yet another curveball at cities such as Lancaster.

The city's discretionary budget today is largely tied up in its police and fire budgets. If that revenue is lost, we see two alternatives for the city: find a way to weather it, which would probably include layoffs somewhere, or ask taxpayers to make up the loss in the form of yet another local tax.

Neither is palatable to residents who have already approved a number of new taxes in recent years. Ohio's economy is in a slow recovery; now is not the time to put yet another burden on local taxes.

We urge Sens. Tim Schaffer, R-Lancaster, and Troy Balderson, R-Zanesville, who represents Lancaster, to either reject House Bill 5 or propose amendments that would reduce the impact on Lancaster and other cities.